E-consultancy is an online publisher of best practice internet marketing reports, research and how-to guides. E-consultancy, named Publisher of the Year at the 2006 AOP Awards, also publishes buyer’s guides and has a directory of 100,000+ third party internet marketing white papers. More than 700 E-consultancy users responded to the research email.

The merchants that responded to the email came from a wide variety of industries, including financial, retail, and travel. The findings of this survey address Affiliate Marketing conditions in the UK, and while there may be some differences between Affiliate Marketing in the U.S. and the UK, but this report does give a picture of the Affiliate Marketing industry in the US and the UK. But do keep in mind these numbers portrayed are in respect to the UK.

• 67% of responding merchants have increased sales from 2 years ago.
• 78% of responding merchants are spending more money on their Affiliate Marketing campaigns then they were 2 years ago.
• 78% of responding merchants also said they will spend more money on Affiliate Marketing in the future.
• 50% of responding merchants will add to their Affiliate management team
• 95% of Merchants say that Affiliate Marketing is the most cost-effective way to attract new customers … Email marketing and Paid Search Marketing trailed in this respect.
• Only PPC drives more customer volume than Affiliate Marketing.
• Merchants claim these are the largest barriers to growing their Affiliate Marketing programs:
  • • Lack of internal resource 33%*
    • Difficulty in attracting affiliates 20%
    • Problems with tracking 20%
    • Poorly converting website 19%
    • Restricted budget 18%
• 37% of merchant’s Affiliate programs are managed in house.
• 23% outsource their Affiliate Marketing programs.
• Only 29% of merchants have good communication with their Affiliates.
• 40% of Affiliate Programs are registered with one network and 33% with two networks.
• Merchants choose Affiliate networks based on the following issues:
  • • Network’s relationship with affiliates 47%
    • Technology (tracking and analytics) 40%
    • Level of account management 34%
    • Sector expertise 33%
    • Consultancy / Strategic advice 23%

Overall the Affiliate Marketing industry in the UK is very strong. Not only is it growing, but it is becoming more professional and more respected. Affiliate Marketing is here to stay and its future looks incredibly bright.

Phone tracking for Affiliate sales is not an all too common practice for merchants presently.  It isn’t necessarily difficult to implement, it just requires a script added to the merchant’s site.  The biggest hurdle is getting the phone representatives to ask for the code from customer.  You can also set up an exclusive “800 number” for each affiliate, with the last 4 digits of the phone number being the Affiliate ID.

This is a great tool that I feel should be used by more Affiliate programs so that credit is given to whom it is due.  “800 Numbers” increase overall conversion rates and offer the customer a sense of security.     If you are an Affiliate manager I strongly recommend adding this feature to your site.

Sharper Image may not be doing well financially but they are back online.  Sharper Image is using their Affiliates to drive online traffic to their stores. They are currently offering a number of specials right now to entice Affiliate to market Sharper Image and to attract customers with their bottom floor pricing.

Sharper Image’s Program is run through Pepperjam’s Affiliate Network and has no discernible Affiliate Manager, but rather an Affiliate Team.  I feel this is hurting their program.  While it is smart of them to send out monthly newsletters and to offer tools to Affiliates, I feel they are not managing their program effectively.  They never offer Affiliate any bonuses or incentives since I have joined their programs, and I feel as though most of the coupons that are offered aren’t “Exclusive to Affiliates”.  It seems like every month that they send out their Affiliate Newsletter they are just copying their mass email newsletter and sending it to Affiliates as well.

Clearly they do organize and piece together the newsletter and offer the creative sections, which I do like.  However, the newsletter is weak and doesn’t ever really address their Affiliates.  Other than tools offered by Sharper Image’s Affiliate Team, they seem to be lacking in effort and originality.  I do recommend signing up for their program as they do have some products that are fun to market.

Affiliates use a number of different methods to market their websites. Advertising products is very important, even if through a free avenue, such as search engines.

The question is … when the customer arrives at your Affiliate site, are they going to make you money or are they going to leave?

Is your Affiliate page captivating enough to get the customer to click through your Affiliate links? And once they do, can the merchant help you make the final sales pitch?

Free trials aren’t applicable in every industry or for every product. However, when they do apply they can be a great way to close a sale. Customer enjoy testing what they want to buy. In some ways it makes the customer less impulsive, however, if the customer likes the Free Trial there is an increased chance the customer will make the purchase, making you money.

Free Trials exist for games, software and other products/services that can’t be tested through the Internet.

MicroSoft offers a great example why Free Trials are so effective and help close the sale. They are offering a Free Trial for 60 days for their new MicroSoft Office 2007. They are offering a Free Trial for all versions, including Home and Student, Professional, and Small Business.

Once people take the Free Trial from MicroSoft they will realize that the new Office 2007 is far superior to any previous launched software. Customers are going to want to replace their out of date software after trying the Trial Offer.

This example shows you that Affiliates who work with merchants who offer free trials on their products/services are getting an extra bit of help from the merchant to help put money in your pocket. Utilize these companies and do check out the Free 60 Day Trial of MicroSoft Office 2007.

Each major Affiliate Network has something different to offer both Merchants and Affiliates. In this article I will discuss the strengths and weaknesses of three of the major four Affiliate Networks: Commission Junction, LinkShare, and Share a Sale.

Commission Junction (Merchants)

Merchant Pros

• Ease of Recruiting – large number of Affiliates associated with CJ makes the recruiting process slightly easier for an Affiliate Manager.
• CJ is a trusted and well-known network.
• Strong tracking of Affiliate stats.
• Fast Account Service.
• Excellent for mid-larger companies.
• They offer Search Marketing Solutions.
• CJ will run your program for your company.

Merchant Cons

• High visibility of your program leads to a lot of Affiliates applying to your program that don’t really belong.
• Fraud is a major problem for CJ’s Merchants.
• Website downtimes happen too often, frustrating Affiliates and Merchants alike.
• Since there are so many merchants on CJ, it makes the competition stiffer within like industries.
• Monthly and overall costs.
• Datafeeds are expensive.

LinkShare (Merchant)

Merchant Pros

• Large network allows high visibility for Affiliate Programs.
• Easier recruiting since such a large Affiliate base is registered with LinkShare.
• Nice stats tracking capabilities.
• Strong Account support.
• LinkShare Affiliate Awards held annually.
• Excellent for mid-larger companies.
• Account Management Service and Client Services allows you to let LinkShare run your Affiliate Program for your company.

Merchant Cons

• Parasites are an issue, leading to high levels of fraud at times.
• Costs are less than CJ, but still high.

Share a Sale (Merchant)

Merchant Pros

• Outstanding merchant support. Share a Sale employees are very active in the online community and are easy to talk to.
• Low fees. An up front fee and then a percentage of Affiliate commissions each month.
• Innovators. They just created a “Make a Widget” where the merchant creates a widget based on their datafeed that any Affiliate can use.
• DataFeeds are encouraged and they are cheap.
• Stats tracking is well-represented and easy to follow.
• Small to mid-size companies flourish on Share a Sale.
• Sending Newsletters is easy.
• Able to segment your Affiliate list.

Merchant Cons

• Smaller network so Affiliate Managers must devote more time to recruiting.

Check in tomorrow for the second half of this post when I go over each Affiliate Network’s pros and cons through the eyes of an Affiliate.

Affiliates who rely on Pay per Click campaigns to drive their revenues must be dedicated to the products/services they are selling.  Pay per Click can be a dangerous game if proper research and testing isn’t accomplished.  If you go into a PPC campaign with no prior thought, get ready to watch the money fly out of out pocket while not a single person who clicks buys your Affiliate product or service.

Researching the company that you will use PPC for will tell you whether or not it will be a profitable venture.  The most attractive companies are niche companies whose industry or products sees little competition on the Internet.  Once you have found the Affiliate program that you will run a PPC campaign for, you must create a landing page that offers an incredible pre-sell followed by links only leading to the company’s website.

Once you have your webpage up and running you need to commence your research of keyterms.  Develop a list using long tail keywords, it should be long, so don’t stop until you can not think of anything else.  There are a number of tools that are worthwhile for doing keyword research, but I have always enjoyed using the Keyword Research Tool at SEOBook.com.

Determine bid prices, your daily limit and start inputting your keyterms.  Next you will need to test the ads themselves.  A/B tests work the best in my opinion.  Test until you find the optimal conversion rate combined with click through rate and you will have your campaign set up.  This is a lot of hard work and it needs to be repeated throughout the entire campaign, but after this work is done you will reap the benefits.